Funds advised by Kohlberg Kravis Roberts & Co. L.P. and its affiliates entered into agreement to acquire Smart Metering Systems plc (AIM:SMS) for approximately £1.3 billion on December 7, 2023. The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act. Under the terms of the Acquisition, each SMS Shareholder shall be entitled to receive: for each SMS Share £0.955 in cash. The Acquisition values the entire issued and to be issued ordinary share capital of SMS at approximately £1.3 billion on a fully diluted basis, and this implies an enterprise value of approximately £1.4 billion. The Acquisition values SMS at an EV / EBITDA multiple of 20.0x (calculated based on LTM Pre-exceptional EBITDA of £71 million as of June 2023). The transaction is all-cash acquisition of SMS by Bidco, intended to be recommended unanimously by the SMS Board. Upon completion of the Acquisition, SMS will be wholly-owned by Bidco. The certainty of the all-cash nature of the consideration payable pursuant to the Acquisition will provide SMS Shareholders with the opportunity to receive an immediate and attractive cash sum for all of their SMS Shares, weighed against the risks associated with the delivery of future potential value in the business given the uncertainty and volatility in the broader capital markets and macroeconomic environment which are expected to persist for a period. Post completion of the acquisition, SMS ceases to be a publicly-listed company, Bidco intends that there will be limited headcount reductions related to public company-related functions which will no longer be required under private ownership. Bidco will seek to reassign individuals involved in these functions where possible and will comply with applicable law (including any information and consultation obligations) in connection with any headcount reductions. Bidco expects that, upon the Scheme becoming Effective, the Chairman and each of the non-executive directors on the SMS Board will resign from his or her office as a director of SMS and for the Board's committees to be disbanded. Other than as described above, Bidco does not intend to make any other material reductions to the SMS employee headcount. Bidco has no plans to change the locations of SMS's headquarters, headquarter functions (other than as outlined in the section above) or places of business or to redeploy the fixed assets of SMS and Bidco does not intend to make any changes to SMS's research and development functions. Bidco is providing the cash consideration payable under the Acquisition through a combination of equity and debt financing. The financing will comprise: equity to be drawn from funds, vehicles and/or accounts advised and/or managed by KKR; and a term loan to be provided through an interim facilities agreement between Bidco and certain interim lenders (the "Interim Lenders") i.e. BNP Paribas S.A., HSBC Bank plc, National Westminster Bank Plc and Sumitomo Mitsui Banking Corporation, London Branch.

The Acquisition will be put to SMS Shareholders at the Court Meeting and at the SMS General Meeting. The Court Meeting and the SMS General Meeting are required to enable SMS Shareholders to consider and, if thought fit, vote in favour of the Scheme and the resolutions to approve and implement the Scheme. In order to become Effective, the Scheme must be approved by a majority in number of the SMS Shareholders present, entitled to vote and voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the SMS Shares voted. In addition, Special Resolutions approving and implementing the Scheme must be passed by SMS Shareholders representing at least 75 per cent. of votes cast at the SMS General Meeting. In addition, Acquisition will be conditional upon the following Conditions no relevant government or governmental, quasi-governmental, supranational, statutory, regulatory, administrative, environmental, professional or investigative body, court, trade agency, association, institution, any entity owned or controlled by any relevant government or state, or any other body or person whatsoever in any jurisdiction. The Acquisition will be subject to the Conditions and further terms set out in Appendix I to this Announcement. It is expected that the Scheme will become Effective in Q1 2024. As of January 17, 2024, The SMS Directors believe that Bidco's decision to switch to a Takeover Offer (with the consent of SMS) will allow SMS Shareholders to benefit from the Acquisition. The terms and conditions of the Acquisition remain unchanged from those set out in the Scheme Document and the amended conditions are on the unconditional date of the Takeover Offer will result in Bidco or another member of the Bidco Group holding SMS Shares carrying in aggregate more than 50% of SMS. The SMS Directors intend to unanimously recommend that the SMS Shareholders accept, or procure the acceptance of, the Takeover Offer. Accordingly the SMS Board recommends that SMS Shareholders do not attend the Court Meeting and the General Meeting on January 22, 2024.

Shirav Patel, Francesco Puletti, Andrew Foster, George Chalaris and Nagib Ahmad of Morgan Stanley & Co. International plc and Adam Hain and Ashish Mehta of Macquarie Capital Funds (Europe) Ltd. acted as financial advisor to KKR. Mark Preston, Evgeni Jordanov, Matthew Coakes and Sam Jackson of RBC Europe Limited and Henry Reast, James Rudd and Shalin Bhamra of Investec Bank plc acted as financial advisor to Smart Metering Systems. Neil McDonald, Peter Lynch and Adam Rae of Cavendish Securities PLC also acted as financial advisor to Smart Metering Systems. Hogan Lovells International LLP is acting as legal adviser to SMS in connection with the Acquisition. Clare Gaskell, Amy Mahon and Etienne Renaudeau of Simpson Thacher & Bartlett LLP are acting as legal advisors to KKR and Bidco. Burness Paull LLP are providing legal advice to SMS as to Scottish law.